Steel Dynamics has profitable 2019, but not at 2018’s pace
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Steel Dynamics has profitable 2019, but not at 2018’s pace

Steelmaker reports net income of $671 million, down from $1.26 billion in 2018.

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January 23, 2020

Fort Wayne, Indiana-based Steel Dynamics Inc. (SDI) has reported net sales of $10.5 billion and net income of $671 million in 2019, recording a profitable year but not at the record-shattering level of 2018.

The electric arc furnace (EAF) steelmaker says it shipped out 10.8 million tons of steel in 2019, and called its operating income of $987 million and net income of $671 million SDI’s “third-best performance” in company history.

In a press release accompanying its annual and fourth quarter results, SDI says its lower earnings in the fourth quarter of 2019 resulted in part “from two planned annual maintenance outages at the company’s Butler [Indiana] and Columbus [Indiana] flat roll divisions.”

The company cites low ferrous scrap prices in the fourth quarter of 2019 and throughout the year as being pertinent both to its steelmaking costs and its recycling division’s performance.

“Ferrous scrap prices declined in eight of the past twelve months during 2019, resulting in our metals recycling operations earning $28 million in 2019, compared to $88 million [in 2018],” states Mark D. Millett, president and CEO of SDI. The company’s metal recycling operations includes the OmniSource network of scrap processing and brokerage locations.

“Monthly prime scrap indices declined approximately $35 per gross ton on average from October through December, compared to July through September 2019,” writes the company in its news release.

“In concert, the company’s metals recycling platform’s average ferrous scrap selling price declined $28 per gross ton and shipments were seasonally six percent lower sequentially, resulting in an operating loss of $5 million.” That says SDI, compared to an operating profit of $3 million for its recycling operations in the third quarter of 2019.

“Even though 2019 was one of our best years, it was challenged with high customer steel inventories, as many customers purchased beyond normal demand levels in 2018,” says Millett. “Domestic steel demand remained steady in 2019, but as customers began to destock inventories, steel prices declined throughout the year.”

Regarding 2020, Millet comments, “Looking ahead, steel customer inventory levels have moderated, and underlying domestic steel demand remains intact for the primary steel consuming sectors, including automotive and construction. Customers have been positive concerning the business outlook for 2020.”

He continues, “We are excited about our Sinton, Texas, flat roll steel mill project, and the associated long-term value creation it will bring through geographic and value-added product diversification.”